Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Phison Electronics Corp (ROCO:8299, Financial) reported a significant year-over-year revenue improvement of 70.5%, reaching $15 billion.
- The company's enterprise segment grew from 5% in CQ1 to 14% in CQ2, indicating a strong shift towards enterprise storage solutions.
- Phison's gross margin improved to 34.86%, with a potential increase to 35.3% after accounting for inventory write-downs.
- The company launched its aiDAPTIV Pro Suite, attracting interest from Tier 1 server makers and receiving an award for Most Innovative AI Application.
- Phison's investment in high-density enterprise storage solutions, such as the 64 terabyte and upcoming 128 terabyte SSDs, positions it alongside major players like Samsung.
Negative Points
- The retail segment remains weak, with Phison expressing no interest in following the low pricing trends, leading to a decline in retail revenue.
- The company faces challenges in the NAND market, with high prices impacting the enterprise business and retail prices being described as 'bloody'.
- Phison's EPS slightly decreased due to an increase in total shares from a treasury share issue in CQ1.
- The company is experiencing a slowdown in consumer demand, particularly in the PC OEM and smartphone markets.
- Phison's inventory levels remain high, with concerns about maintaining sufficient inventory amidst fluctuating NAND prices and market demand.
Q & A Highlights
Q: Is there a significant gap between your inventory cost and current NAND prices?
A: Industrial inventory costs are much lower than current prices. For enterprise, we accumulated inventory from last year, which remains competitive. Retail prices are low due to market dumping, but overall, our inventory costs are healthy compared to the market. - Khein Seng Pua, CEO
Q: How is demand expected to evolve in the second half of the year?
A: Consumer demand is slow, but we anticipate a bounce back in retail by CQ4 due to the Christmas season. Enterprise demand remains strong, and we are preparing for increased demand in CQ1. AI and enterprise sectors are expected to grow significantly. - Khein Seng Pua, CEO
Q: Can you discuss the margin differences across your product segments?
A: Controllers have the highest margins, while retail is currently the lowest. Industrial margins are stable, and embedded OEM is challenging but improving. Enterprise margins depend on customization, which offers better margins than mainstream products. - Khein Seng Pua, CEO
Q: How is your market share in the PC client SSD market progressing?
A: We are increasing our market share in PC OEM due to direct design wins with Tier 1 companies. However, we are not pursuing the retail market aggressively due to cost dumping in China. - Khein Seng Pua, CEO
Q: What are your biggest concerns for the next six months to a year?
A: The main concern is the rising NAND prices for enterprise business. We aim to negotiate better terms with suppliers. Retail remains a seasonal business, and we are focusing on gaining Gen5 design wins and promoting aiDAPTIV to improve margins. - Khein Seng Pua, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
